Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

2. To ask the Minister for Jobs, Enterprise and Innovation if, following publication of the report on the sale and liquidation of Clerys, he will now amend the Companies Act 2014. [28707/15]

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I welcome some of the Clerys workers who are in the Visitors Gallery. I wish to express my and my party's solidarity with them. It has been more than a month since these workers were turfed out on the street, yet nothing has been done for them. My question is specifically focused on what is available in company legislation to ensure the rights of these individuals are upheld. A number of companies and workers have got stuffed previously, and the State has been left on the hook for millions of euro. What is different now whereby this legislation will make a difference in the lives of these people?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I agree with my colleague, Deputy Nash, that this has been an appalling case. It certainly has raised issues that deserve attention.

In the context of company law, the liquidation of OCS Operations Limited is currently in the hands of liquidators under the supervision of the High Court. While the liquidation is at an early stage, I understand the High Court was informed at the hearing on 6 July that the liquidators have identified a number of matters which they intend to investigate as part of the liquidation process. It is only when all the facts and events leading up to the winding up of the company are known and any potential legal challenges are raised that an informed decision can be made on whether an amendment to company law should be made.

The liquidators have important duties under company law. They include an obligation to provide, within six months of their appointment, to the Director of Corporate Enforcement a report on the conduct of directors and a requirement to make an application to the High Court for the restriction of directors unless the Director of Corporate Enforcement has relieved the liquidator of this requirement. The 2014 Companies Act introduced stronger provisions under which a related company may be required to contribute to debts of a company being wound up, under section 599, and the pooling of assets of related companies, under section 600. The effectiveness of these provisions remain to be tested and it would be inappropriate to comment on their application in any case before the courts.

The operation of the Companies Acts are under continual review, particularly through the work of the Company Law Review Group. Its current work programme includes receivers, examinership and winding up. I will closely monitor the developments in this case and evaluate their impact on the adequacy of company law.

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The Minister of State, Deputy Nash, in fairness to him, last week set out in great detail what happened with regard to Gordon Brothers and Natrium Limited. They used a precise, methodical technique to separate their responsibilities and their assets. Then the workers were callously turfed out on the street. In that report, the Minister says it was never really the intention of Gordon Brothers to operate a successful department store in the city and that their objective was a property play. The sole reason for the multiple companies was the separating of assets. Considering all these issues, why is it that the Minister believes there are no deficiencies in the legislation? Even the Minister's colleague, Senator Lorraine Higgins, admitted on the radio last week that this was an issue relating to the corporate veil. She further admitted that this is not the first time it has happened. I believe a large number of companies have experienced this.

Why is the Minister, the author of this legislation, now saying that there is a question about the legislation and whether it could or could not resolve this? Surely as author of the legislation he should know this. If there is still a question mark about it, why is he not making damned sure and inserting a provision into legislation in a watertight fashion to ensure this can never happen again?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy knows, this section has not been tested in the courts.

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Then test it.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

However, the section provides that on the application of the liquidator or any creditor of a contributory company that is being wound up, the court, if it is satisfied that it is just and equitable to do so, may make an order. The legislation sets out the various issues which the court will examine, including the extent to which the related company took part in the management of the company being wound up, the conduct of the related company towards the creditors of the company being wound up and the effect which such order would be likely to have on the creditor of the related company concerned. There is, therefore, provision in the law, as the Deputy knows. The issue now is that the liquidation is in progress. As the Minister of State, Deputy Nash, said in his report, it would not be appropriate at this point to comment on the application of such a section in an individual case. However, the section is in place. Clearly, I am not the judge who will make a judgment in respect of its provisions.

As I said earlier, I will closely monitor the developments in this case and evaluate their impact on the adequacy of Irish company law. I did not make, as the Deputy sought to infer, any categorical statement about the adequacy of existing company law. We will watch the testing of this important provision.

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I cannot think of another legislative measure on which the Government would respond with such a wishy-washy answer, saying that the legislation it drafted may or may not deal with the situation. Usually, the Government responds in a very robust fashion and over-eggs the strength of a legislative measure to do what it says it will do. However, in this case, involving legislation that is only in place for a year and for which the Minister is responsible, the Minister says it must be tested, and while the Government talks about the testing of this legislation, men and women throughout the country are getting turfed out of jobs. By the time we finish this so-called testing, I guarantee that another company will be in a similar situation.

The Minister of State said in his report that section 224 of the Companies Act provides, in a general fashion, for matters to which directors must have regard in the performance of their functions. He went on to say that this fiduciary duty is enforceable in the same way as any other duty of a director in a company. The reality is that multiple companies are set up, with assets being placed in one and the employment of staff in another. I am aware of a firm in Meath which did the same thing. It went to the Labour Court and secured a reduction in the wages of company B, the company without the assets. It was allowed to do that. This is happening daily and it should have been tested previously. Will the Minister use the time he has left in Government not by talking about a wishy-washy legislative measure but by inserting a cast-iron guarantee that this will not happen to workers in future?

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There are two issues here. One is the behaviour of the directors, and there is an obligation on the liquidator to report to the Office of the Director of Corporate Enforcement on the behaviour of the directors. The Office of the Director of Corporate Enforcement is an independent office. It is not led or said by a Minister or anybody else. That is the important strength of the office. It is independent in making a judgment on the behaviour of the directors, and that is as it should be. A decision of that nature cannot be made by Ministers.

In the same way, there is a legislative provision under which the courts may decide that the corporate veil should not apply in this case. I have outlined the provisions in this regard, whereby the liquidator or a creditor can take a case and in deciding the matter-----

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The legislation only may work.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

-----the court will have regard to the extent to which the related company took part in the management and the conduct of the related company. What the court will have regard to is clearly set out. Once again, however, it is not up to a Minister to make a judgment.

Peadar Tóibín (Meath West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is up to the Minister to write legislation.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

A judgment must be made by the courts. That is the position with company law in any country. The Oireachtas drafts the provisions but the court must apply them.